Friday, February 24, 2017
One of the many questions surrounding benefit corporations is whether their choice of legal entity form will scare away investors.
As previously reported, we now have our first publicly traded benefit corporation. And in this week's news certified B corp and benefit corporation Data.world announced a 18.7 million dollar raise. This raise ranks in the top-ten largest raises by a benefit corporation, according to the information I have seen on benefit corporations. I compiled the publicly available information I was able to uncover on social enterprise raises (including by benefit corporations) in a forthcoming symposium article for the Seattle University Law Review. It is quite possible that there are raises that have been kept quiet and that I have not seen. This Data.world news was announced days after final edits and will not be in my article.
As is often the case in social enterprise news, this news could be seen as encouraging or discouraging for supporters of the benefit corporation form.
On one hand, this is a fairly sizeable raise and a bit of evidence that not all serious investors are scared away by a legal form that mandates a general public benefit purpose.
On the other hand, the mere fact that a raise of under $20 million dollars is big news in the benefit corporation world (commanding its own announcement e-mail from benefit corporation proponent organization B Lab) shows that the benefit corporation form has yet to go mainstream. A raise under $20 million dollars hardly qualifies as news in the traditional financial world. And, as mentioned, to date, there have only been a handful of raises of this size for companies using the social enterprise forms.
Still, I think it is fair to say that benefit corporations have already come further than harsh critics originally thought was possible. The benefit corporation form still needs to evolve significantly, in my opinion, but the form is still growing and the positive news for the form has not yet stopped.